Start For Free

Fast, Secure, and Always Accurate!

Back to List

Category: Iowa

Iowa Out-of-State Tax Credit

All income an Iowa resident earns is taxable to Iowa to the same extent that it is taxable on the federal return even if the income was earned in another state or foreign country. If another state or foreign country taxes that same income, then the Iowa resident may be able to claim a credit for taxes paid to another state.

  • Nonresidents of Iowa cannot claim this credit.
  • Part-year residents of Iowa may claim this credit only if the income they earned during that part of the year they were Iowa residents was also taxed by another state or country. **The state or foreign income tax imposed on your income tax return is the tax shown on the income tax return you filed with that state or foreign country. It is not the amount that was withheld from your wages**
  • An IA 130 form must be figured separately for each state or foreign country. Separate IA 130's are not required for foreign taxes paid by mutual funds or other regulated investment companies.
  • The combined total of all credits cannot exceed the Iowa tax liability.

Note: If you have income that is taxed in Iowa and another state, TaxSlayer will automatically calculate this credit for your Resident return if you have a Nonresident return created on your account. If the other state return is a Part-Year return, you will be required to enter the information manually.